A debt relief order, or DRO, is a debt solution that can help you become debt free if you have a relatively low level of debt and few assets. A DRO freezes your debt repayments and interest for 12 months, giving you time to get your finances in order. If your financial situation hasn’t changed at the end of the 12-month period, all of the debts included in your DRO will be written off.
In this post, debt expert Carrington Dean shares some of the main benefits of entering a debt relief order alongside some of the disadvantages that it can bring. Through helping hundreds of struggling individuals get their finances back on track, Carrington Dean provides free tips and advice on everything from common money questions to can you get a mortgage with a DRO?
There are many benefits to getting a debt relief order, including:
- Becoming Debt Free
- One of the main benefits of a debt relief order is that it can help you to become debt free. This means that you will no longer have to make any payments toward your debts and your creditors will not be able to take any further action against you. A debt relief order can give you the fresh start that you need to get your finances back on track.
- Stopping Creditors from Harassing You
- One of the main benefits of a DRO is that it can stop creditors from harassing you. Creditors are not allowed to contact you or take any action to recover the debt while your DRO is in place. This can provide much-needed relief from stress and anxiety caused by debt problems. In addition, a DRO can give you some breathing space to work out a plan to repay your debts. Once your DRO is lifted, you may be able to negotiate more affordable repayment terms with your creditors.
- Having Your Debt Repayments and Interest Frozen for 12 Months
- Once a DRO is in place, your debt repayments and interest are frozen for 12 months. This gives you time to get your finances back on track without the added pressure of debt repayments.
- Having Your Debt Written Off After 12 Months
- Once the debt relief order is in place, it is a lot simpler to start paying back what you owe. After 12 months, any remaining debt included in the debt relief order will be written off. This can give you a fresh start and help you to regain control of your finances. If you are struggling to pay your debts, a debt relief order may be the right solution for you.
There are also some disadvantages to getting a debt relief order, including:
- Your Credit Rating Will Be Affected for 6 Years
- A debt relief order is a debt solution for people with low incomes and few assets. It affects your credit rating for 6 years. This means it will be harder to get credit during this time. If you need to borrow money, you may have to pay a higher interest rate.